
Sri Lanka aid contingent on debt sustainability
The IMF stated Thursday it is committed to helping crisis-battered Sri Lanka, however, any useful resource software will be contingent on ensuring the country’s unsustainable debt can be managed.
The cash-strapped South Asian country of 22 million people is dealing with its worst crisis given that independence: it has suffered months of dire shortages of food and drugs, as well as intensifying anti-authorities protests.
Sri Lanka has defaulted on its $51-billion foreign debt and on Tuesday appointed international consultants to help restructure its international sovereign bonds and bilateral loans.
The government also effectively ended subsidies on fuel by raising prices to a record high on Tuesday.
An IMF team held two weeks of discussions with authorities in Colombo and expressed commitment to continue to work on a package of “concrete measures” to end the crisis.
“We are deeply concerned about the impact of the ongoing crisis on the people, particularly the poor and vulnerable groups,” the IMF said in a statement.
The Washington-based crisis lender welcomed the appointment of advisors to work with the country’s creditors.
However, since the country’s public debt is “assessed as unsustainable, approval by the Executive Board of an IMF-supported program for Sri Lanka would require adequate assurances that debt sustainability will be restored,” the statement said.
Local officials have stated it could take another six months to finalize an IMF aid application.
The fund said the talks have been “focused on restoring fiscal sustainability while protecting the prone and poor,” in addition to reforms to enhance the boom.
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